(1888PressRelease)
April 12, 2007 - The last 10 years allowed a large segment of the population with low income and "sketchy" credit to purchase homes, which they otherwise wouldn't qualify for or couldn't afford. Most of these consumers were minorities eager to own a piece of the American dream. In some cases, mortgage applicants were immigrants, who did not even understand their loan terms.
Subprime lenders for their part, were more than happy to finance "exotic" mortgage loans because they assumed home values would appreciate 5%, 10%, 20% and homeowners would be able to refinance their loans. Some of the exotic loans offered included 2/28 adjustable rate loans, where the borrower pays a fixed rate for two years and then the loan adjusts every year for the next 28 years.
"These homeowners were duped," says Delia Galley, president of Pioneerlenders.com. "No one in their right mind would want a mortgage that changes every year for 28 years. It's absurd". "If you are a homeowner with a subprime mortgage loan, you need to go back and review your mortgage contract and take the appropriate action to refinance before your loan expires. Don't wait till your house is in foreclosure to seek help".
Homeowners are encouraged to do the following:
1. Understand your current loan terms. What type of loan do you have? When will the loan adjust? Are there prepayment penalties?
2. Don't panic. You can refinance your loan into a fixed rate mortgage loan or even a longterm adjustable loan that offers at least 10 years of fixed monthly payments.
3. Don't wait. Waiting can quickly become a foreclosure or bankruptcy situation. Start shopping for a refinance loan with a reputable lender.
4. Sell, if you have to. Don't ruin your credit with a foreclosure or bankruptcy. Sell the house and move into a smaller home, if you cannot afford your mortgage.
